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The clock is ticking on the debt refinance crisis. Not that we need a recap, but briefly the problem is this: there is anywhere from $400 billion to $700 billion of real estate debt that will need to be refinanced over the next few years. With the CMBS market out of commission, much of it will go into default. The government is moving towards its own vision of a solution: mainly TALF, which has been expanded to include both new and legacy CMBS and PPIP, which has been announced but little else by Treasury. Also, the Obama Administration’s plan to realign the financial sector regulatory authority includes new safeguards for CMBS. While the program has gotten off to a slow start, it’s been widely rumored there will likely be some kind of new issuance in Q3 – and certainly by Q4 with TALF as the driver. Slowly, though, there are other, more independent signs of life in the private sector of some kind of CMBS revitalization: The so-called re-REMICs that hit the market last month. Such issuers as Morgan Stanley, Bank of America and Credit Suisse essentially resecuritized CMBS loans after realigning the risk profile to be more favorable to investors. It’s not as good as having new orginations – basically the re-REMICs are just nibbling away at existing inventory. But then again, any activity in the securitization market these days is a good thing. Whether the combined efforts of the government and private sector will be enough to beat the clock on the first wave of expected debt defaults, remains to be seen.

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